Bitcoin’s price has recently entered a consolidation phase, trading between the $85,000 and $88,000 range. Alongside Bitcoin, other top altcoins have shown similar price patterns, which can be attributed to reduced demand for both the token and the blockchain.
However, on closer inspection of the technical on-chain data, a concerning trend has emerged among short-term Bitcoin holders, with a large portion of them now experiencing significant losses. Over 9 out of 10 short-term holders are facing a scenario where their investments are “underwater” due to purchasing Bitcoin during its all-time high (ATH) in the early days of 2025.
Short-Term Holders Forced into Long-Term Holding
As per the latest on-chain data, over 90% of short-term holders are currently holding their positions in loss. This has led to a shift where a substantial portion of these holders are now being forced into long-term holding. The percentage of supply held by these loss-making investors has breached the crucial +1SD band, indicating potential for higher liquidation rates once the price reaches the breakeven point.
This situation marks a stark contrast to previous occurrences, as such a large number of short-term holders in loss has only been seen twice before—most notably during the current bull cycle.
Declining Active Addresses
Another worrying trend is the decline in active addresses on the Bitcoin network. Over the past two months, Bitcoin has seen a steady drop in its active user base, with the number of active addresses falling from 23.75 million in January to 20.81 million in February. March appears to be following the same downward trend, with only 19.76 million active users recorded for the month. This suggests a reduction in both new investors and the creation of new wallets.
Bitcoin’s Total Supply in Loss
While over 40% of market participants have seen substantial profits from their Bitcoin investments, the short-term holders are facing steep losses. Currently, 3.4 million BTC held by short-term holders are under loss, the highest since the 2018 bull market peak. This data indicates significant financial strain among those who entered the market during the price surge.
Conclusion: Sideways Trend and Market Pressure
Bitcoin’s price has entered a sideways pattern, which has led to reduced profits and an increase in the number of loss-taking events. The lack of strong demand has created a side-sell pressure in the market. While short-term holders are feeling the financial burden, long-term holders, including whales and institutions, are seizing this opportunity to accumulate more Bitcoin at lower prices. The ongoing accumulation by these entities could help sustain the price, even as weaker market participants exit.
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